The foundation for Minnesota’s massive shutdown of state government Friday was set last fall when voters put ideological polar opposites in charge of state government: Democratic Gov. Mark Dayton, who ran on a “tax the rich” platform, and new Republican majorities in the House and Senate, whose mantra was to cut taxes and spending.

For the past five months, the two sides tried to bridge the gap between their opposing views on how to erase a projected $5 billion deficit in the state budget.

After a week of intense negotiations, they came very close to cutting a deal Thursday.

But in the end, they were unwilling to compromise on their most fundamental beliefs.

Throughout his lengthy political career, Dayton, a liberal Democrat, has maintained government should provide for the poor, sick and elderly, build excellent schools and transportation systems and protect natural resources. The heir to a department store fortune, he also believes his fellow well-off Minnesotans should pay more in taxes.

Republicans are equally fervent in their belief that government has grown too big, too intrusive and too expensive and that hard-pressed Minnesota families and businesses can’t afford to pay more taxes in a sputtering economy.

At the start of the year, Dayton proposed increasing income taxes on the top 5 percent of income earners to help plug the budget gap. He dropped that to the top 2 percent in May, and in a final offer last week, he whittled it down to the top 1 percent – applying it only to 7,700 millionaires.

When Republicans refused to budge and he declared an impasse, they accused him of “shutting down government for a tax increase.”

That wasn’t the whole story, however. He was willing to shut down government for a tax increase that he believed was necessary to pay for what he considers essential public services that Republicans would have cut.

During a news conference Thursday night, two hours before the shutdown, Dayton framed the budget dispute as a moral issue.

He said he could not accept cutting off personal-care attendants for people with disabilities, raising college tuition beyond many students’ ability to pay, denying the elderly the in-home services they need to stay in their homes or cutting special education, all “so that millionaires do not have to pay one dollar more in taxes.”

During a news conference outside Dayton’s state Capitol office late Thursday night, House Speaker Kurt Zellers, R-Maple Grove, said Republicans’ dispute with the governor was at its core about spending.

“We’re talking about runaway spending that we can’t afford,” Zellers said. “We will not saddle our children and grandchildren with mountains of debt, with promises for funding that will not be there in the future.”

Nineteen of the 37 Republican senators are freshmen, and “they came here to do things differently,” Koch said.

Many of them see the growth of government, particularly the soaring federal debt, as a fundamental threat to the nation. They want to reduce the size and scope of government to ensure individual liberty and unleash free markets.

A lot of them were unwilling to compromise their principles to get a deal with Dayton. Senate Minority Leader Tom Bakk, DFL-Cook, said this was the first legislative session in his long career where ” ‘compromise’ was a dirty word.”

Republican leaders wanted to “spend no more than was in the checkbook,” Zellers said, referring to the $34 billion in revenue the state is scheduled to collect over the next two years. Going into the final week, Dayton was calling for a $35.8 billion budget, including $1.8 billion in new taxes.

Koch was in an “almost impossible situation,” said Larry Jacobs, director of the University of Minnesota’s Center for the Study of Politics and Governance.

The first-term GOP senators “came into office with a fairly extreme view,” Jacobs said. “They believe there has been too much compromise over the years. They are willing to lose an election to make a point….I think they see this as a vote of conscience.”

Koch acknowledged the leaders struggled to get the votes to spend $34 billion, which is approximately the same amount the state spent in the past two years. In the end, she said, the freshmen “had heartburn but didn’t want a shutdown.”

During the final days of negotiations, Republican leaders continually asserted they were very close to a deal with Dayton without offering proof.

On Friday, while reviewing with reporters the offers they exchanged with the governor, Zellers and Koch said they thought they made a major breakthrough Wednesday night when Dayton suggested he would take his tax increase off the table and instead find extra revenue by delaying more than $1 billion in state payments to school districts.

“I believed at that point it was a done deal,” Zellers said.

That school-aid shift was too big for Republicans to stomach, he said, so the next morning they offered to delay $700 million in K-12 payments and also proposed borrowing up to $400 million that would be repaid from tobacco company payments to the state that settled an industry lawsuit in 1998.

That would have given Dayton more than $1 billion in new revenue without breaking Republican promises not to increase taxes.

“It was a bumpy road, but it was a road out,” said House Ways and Means Committee Chair Mary Liz Holberg, R-Lakeville.

But the governor turned down their offer and instead proposed the new income tax on millionaires, an unacceptable proposition for the GOP.

If they had agreed on a way to raise revenue, they could have quickly resolved the other issues, Koch said.

“We were within spitting distance on six of the nine (budget) bills,” she said.

DFLers accused Republicans of gumming up the budget talks by trying to tack a series of conservative social policies – including a ban on taxpayer funding of abortions, a requirement that voters show photo IDs at the polls and a GOP redistricting plan – onto the spending bills.

The GOP leaders said they threw out those ideas, knowing Dayton wouldn’t accept them, as possible trade bait for concessions to the governor. The Republicans didn’t put any policy items in their final budget offer, Holberg said.

Bill Salisbury has been a newspaper reporter since 1971. He started covering the Minnesota Capitol for the Rochester Post-Bulletin in 1975, joined the Pioneer Press as a general assignment reporter in 1977 and was assigned to the Capitol bureau in 1978. He was the paper's Washington correspondent from 1994 through 1999, when he returned to the Capitol bureau. Although he retired in January 2015, he continues to work at the Capitol part time.

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